HONG KONG SAR - Media OutReach - 8 June 2021 -Global real estate services firm Cushman & Wakefield publishes Hong Kong Residential Markets Review and Forecast 2021 Q2 today. Steady economic recovery, declining unemployment rate and stabilizing pandemic situation, have contributed to significant growth in the Hong Kong property market in Q2, particularly for the residential market. Residential transaction has hit a nine-year high in the first half of 2021. Home prices are expected to return to their peak in Q3 at a level before COVID outbreak and social events. Resumption of China-Hong Kong travel in the second half of 2021 is expected to bring in mainland buyers, providing more favourable conditions for an overall recovery of the local property market.
In the first two-month period of 2021 Q2, the overall total Sales and Purchase Agreements (S&Ps) stood at 18,590 cases. Combining an estimated 9,500 cases in June brings the quarterly transactions to 28,090 cases, an increase of 37% y-o-y or 20% q-o-q. Residential transactions rose by 20% q-o-q to 21,709 cases, resulting in a total of 39,840 cases in the first half of 2021, the highest since 2012 and a nine-year record.
Mr. Keith Chan, Cushman & Wakefield's Director, Head of Research, Hong Kong, mentions, "The economy of Hong Kong shows early signs of picking up with a growth of 7.9% y-o-y in Q1, and has twisted a six-quarter contraction. With an improving labour market where the unemployment rate lowered to 6.4%, and the fourth wave of COVID outbreak under control, the housing market sentiment has turned warm with home prices in April rose by 4.1% y-o-y. Residential transactions in the first four months of 2021 were dominated by secondary sales which took up 81%, up from 74% in 2020. This number has returned to the traditional secondary to primary sales ratio of 80 to 20%."
According to the analysis of Mr. Edgar Lai, Cushman & Wakefield's Director, Valuation and Advisory Services, Hong Kong, both mass residential and luxury residential markets show similar trends. The average prices of housing estates in multiple districts have increased by over 10% to date since this year. Take City One Shatin as an example, the average price has increased by 5.4% in Q2, over 10% since this year, and recorded "five consecutive rises" with the average price nearing its peak of June 2019. The average price of Taikoo Shing has also increased by 5.7% q-o-q and is expected to record a 15.3% increase by the end of June. The luxury home market has also rebounded, with Bel-Air rising by 9.3% in Q2. This upward trend is expected to continue.
As for private housing supply in the future, a more reasonable number of about 19,100 new units per year are expected in the pipeline in the next two years. While slightly above the average annual supply of 14,300 units in the past ten years, the number is still low compared to the average of 26,600 units from 1991 to 2000.
Mr. Alva To, Cushman & Wakefield's Vice President, Greater China & Head of Consulting, Greater China, commented, "Residential transactions in Q2 were brisk with upsurge in both volume and prices. The tight supply of new residential properties was a favourable contributor, but the support chiefly came from the better-than-expected economic growth, persistent low interest rates, easing of the pandemic, and further reduction of unemployment rate therefore unleashing purchase power. Looking ahead, we expect that with the resumption of cross-border travels in the second half of this year, mainland buyers will inject momentum into local property sales. The residential market will remain active in the second half of this year, with room for a 5% rise in price, or 10% for the whole year. In Q3, it might return to its historical peak prior to the outbreak of social events in June 2019 and the pandemic. Luxury residential market is likely to rise by another 5% to 10% within this year."
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About Cushman & Wakefield
Cushman & Wakefield (NYSE: CWK) is a leading global real estate services firm that delivers exceptional value for real estate occupiers and owners. Cushman & Wakefield is among the largest real estate services firms with approximately 50,000 employees in over 400 offices and 60 countries. Across Greater China, 22 offices are servicing the local market. The company won four of the top awards in the Euromoney Survey 2017, 2018 and 2020 in the categories of Overall, Agency Letting/Sales, Valuation and Research in China. In 2020, the firm had revenue of $7.8 billion across core services of property, facilities and project management, leasing, capital markets, valuation and other services. To learn more, visit www.cushmanwakefield.com.hk or follow us on LinkedIn (https://www.linkedin.com/company/cushman-&-wakefield-greater-china).